Exactly, "you can't win" is grossly under-specified. The goal of the demo is just to show that laws can't be broken. Yet, if that's your only law, the AI can do whatever to protect it - including changing how the character moves, or even removing the flag entirely!
So, yes, that's the issue with laws: they only protect what you remember to write. They're not a silver bullet. But they can still be incredibly useful, because it takes a small law to protect against entire classes of bug, covering your entire codebase. For example:
LAW: "the sum of all balances in this contract must be zero"
This one liner would have prevented Ethereum's infamous "The DAO" hack, where millions were stolen and almost undermined the entire project. But if your laws are under-specifying or ill-specifying your intents, Bend can't do anything to protect you.
Thought about automated discovery of laws in an existing codebase?
If you can find a law which the existing code obeys, and show it to a human, and if they agree, save it. And maybe the AI could make a decent guess as to what kind of laws would appeal to a human versus which wouldn't – a simple law identifying a fundamental constraint the system obeys is good, something really complicated or constraining something coincidentally true isn't
Or some kind of measure of coverage? you'd never want 100% – then your laws would become so complex you couldn't follow or maintain them – but if it is very low, that can be a signal to increase it